Environment

Climate change resilience

We strive to reduce the emissions intensity of our businesses and improve their resilience to climate change.

Given the risk of significant climate change, our businesses need to respond in two ways. Firstly, we need to actively monitor and manage our own greenhouse gas emissions and reduce them where possible. Secondly, we need to understand the specific risks created by climate change for our businesses and address those risks.

Position on climate change

We recognise that the climate is changing due to human actions and we acknowledge that we and Australia have a part to play in mitigating this climate change. Wesfarmers supports the Federal Government’s commitment to work towards a global agreement to limit global warming to less than 2°C above pre-industrial levels. Long-term policy certainty is a pre-requisite for decarbonisation to occur efficiently and affordably. We will continue to improve the greenhouse gas efficiency of our operations, which reduces our own business costs and risk, as well as contributing to climate change mitigation.

Both renewables and lower-emission fossil fuels will form an integral part of the energy generation mix throughout the transition to a low emission global economy.

In September 2015, Wesfarmers became a signatory to the Business Coalition on Climate Change, which can be viewed here.

Managing our emissions

We emit greenhouse gases both directly and indirectly. Our direct (scope one) emissions come from our industrial businesses, including the use of natural gas, fugitives, and diesel, and fugitive emissions from coal mining. Our main source of indirect emissions is electricity used by our operations (scope two) emissions. We also estimate our scope three emissions, which are other indirect emissions that occur as a result of our operations, but are not controlled by us.

We are able to manage our emissions intensity through technology improvements in our industrial processes and through energy efficiency initiatives in all our businesses.

This year, our total scope one and two emissions were 4,011,584 tonnes CO2e. Despite an increase in emissions from our Resources business, this represented a total decrease of one per cent from last year, driven by energy efficiency projects at Coles and Target. Our energy use decreased from 31 to 30.8 petajoules, with an energy intensity for all energy consumed for 493 gigajoules per million dollars of revenue.

This year we have estimated scope three emissions of 772,736 tonnes CO2e. This includes:

27,337 tonnes CO2e from air travel;

154,701 tonnes CO2e in emissions that escape from waste that is disposed to landfill;

474,622 tonnes CO2e in emissions from electricity; and

103,110 CO2e in emissions from LPG, natural gas and diesel.

This also includes an estimation of scope three emissions of approximately 13,000 tonnes CO2e from upstream transport providers that serve Coles, Target and Kmart from distribution centres to stores within Australia and transporting goods from mine to port for Wesfarmers Resources.

Our equity share of the scope one and two emissions from our joint ventures was 275,140 tonnes CO2e last year.

Greenhouse gas emissions

4,012

Bunnings pursues lighting initiatives

Wesfarmers divisions use data to manage energy

Over the next 20 years, changes to our climate are likely to occur, even with globally co-ordinated reduction of emissions. Forecasting these changes is complex but ensuring our businesses are robust under potential scenarios reduces financial, operational, regulatory and reputational risk.

Increased weather volatility, increased extreme weather events, higher average temperatures and drier climates all have the potential to impact our operations and supply chains, in a range of ways. This year, we have increased our focus on testing the robustness of our businesses against climate change and have developed a climate change scenario to use in the next cycle of our annual risk process.

We also developed an internal shadow carbon price for use in capital expenditure allocation processes from 1 July 2015. This shadow carbon price is designed to promote marginal emissions abatement projects and to ensure that regulatory, reputational and stranded asset risk are taken into account in relation to emissions intensive investments. This price will be updated annually to take into account developments in government policy.

Shadow carbon price to promote abatement projects

This year, some stakeholders have raised concerns about Wesfarmers’ investment in coal assets. Most coal from our wholly-owned Curragh coal mine is metallurgical coal, which is a necessary component in the steel-making process. We do produce thermal coal at Curragh and in our joint venture Bengalla mine. While we expect that the energy mix will change over time, all feasible scenarios show that it is highly likely that there will be a role for coal as a source of energy for many years. Wesfarmers continues to consider its Resources business to be a valuable addition to its portfolio. For more information about our investment in coal assets, click here.